Starting a gift basket service has many advantages compared to other kinds of businesses: startup costs are low, no special premises are needed, online sales are a possibility, and it can be done to create an ancillary income stream for an existing business such as a florist or bakery.
However, it is still a business enterprise, with profit margins, costs and risks. It is possible to do very well at it without spending all your time working or investing everything you have, but it is also possible to lose a fair amount of money before having to shut it down. Much of the difference lies in being able to offer an outstanding product at a price people will be willing to pay.
Minimum Viable Products
There is always the temptation to go for the best and most impressive contents for each basket, but doing so can easily cause you to price yourself out of the market’s reach. Instead, offer a range of baskets at different price points for different purposes, for instance wedding party favors and hotel greeting baskets.
Some of what goes into each basket will in fact be filler – not useless junk, but not premium quality either. As a general rule, the Pareto principle can be used as a guide: a basket containing 20% highly appealing, extraordinary contents and 80% less distinctive items will mostly be seen as good value, the special goods sticking in people’s memory and the rest mainly being added for bulk. Make sure there are a variety of products so that something will appeal to everyone regardless of diet, lifestyle and individual taste.
Buy in Bulk
Making up baskets for a profit is all about aggregating products: buying appealing items at a low price and combining them to produce something that’s worth more than its components. One way of keeping the price you pay low is to buy a large quantity of something and store it, which of course applies only to non-perishable items. It’s often possible to buy directly from distributors in this case, cutting out retail profit margins. Online outlets are also frequently willing to offer discounts on larger purchases.
Many business experts will tell you that it’s usually a bad idea to tie up a lot of money in inventory, and they are generally right. Essentially, until you sell these items, the money you pay for them isn’t available for marketing, business development or anything else. You run the risk of getting stuck with something that you can’t use for longer than you want, so a little planning and even customer testing will be well worth it.
Bulk purchases also open up the possibility of re-packaging items such as skin products, condiments and coffee. Assuming that you can locate a supplier that offers both good quality and bulk options (Alibaba would be one starting point), you could buy these cheaply by the tens of pounds, buy elegant glass packaging from another supplier, pay a third to sandblast your or your customer’s logo onto them, and fill the containers. This strategy enables you to produce hundreds of graceful basket items for much less than their apparent cost. For an illustration of how this works, go to a supermarket and compare the price of baking mixes with what they contain: flour, cacao, raisins and so forth. The convenience factor of offering these already mixed together in the proper proportions, plus the cost reductions bulk buying make possible, mean that these kinds of products can be both affordable and appealing. Equipment such as laminating or vacuum-sealing machines may be more affordable than you think, especially when you can find a pre-owned model.
The gift products that make customers go “wow” aren’t necessarily the most expensive, but often the most appropriate or unexpected. This applies to basket design as well: how about a “new homeowner” basket for real estate agents containing WD-40, curtain rings, adhesive wall hooks and a few things that won’t cost you a dime, such as local takeout menus and a list of telephone numbers for reliable plumbers and other contractors? Initiative such as this can easily open up new markets for the enterprising gift basket provider.
It’s also worthwhile visiting craft fairs or trawling the internet for creative ideas. Something handmade or artisanal, such as a bottle of marmalade you can’t buy in stores or a knitted soft toy, can add the unforgettable touch to an ensemble while also supporting small businesses in your area.
The basket itself, which most people will have little use for once empty, can also be substituted with something else, such as a mixing bowl for the kitchen, a branded baseball cap, or a plant container. Consider fishing tackle boxes for a package that contains many small items such as beads. Remember: creating an offering that will exceed customers’ and gift recipients’ expectations is not always about the dollar value of a basket’s contents, but in the total experience it can provide.